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New Eligibility Rules for VA Aid and Attendance Benefits

The Veterans Administration has issued new rules for determining financial eligibility for needs-based pension programs, like Aid and Attendance. The rules set a specific net worth standard and eliminate some popular planning options. The rules take effect on October 18, 2018.

The new rules impact VA pension programs, (including home bound and Aid and Attendance), Older Pension Programs, Dependency and Indemnification Compensation (DIC). Aid and Attendance pension benefits help Veterans or their surviving spouses[i] who need long term care at home or in an assisted living facility.

Net Worth Defined

The regulations set, for the first time, a standard eligibility limit for all veterans and surviving spouses. The net worth limit in 2018 is $123,600. This is the same dollar amount as the maximum amount of assets protected for a community spouse under the Medicaid program, but the components of the limit are different for VA and Medicaid.

For VA purposes, net worth includes the countable assets of the veteran and spouse, plus their net income of both spouses. (The income for VA purposes does not include qualified unreimbursed medical expenses). The primary residence including up to 2 acres of land is not countable, even if it is not occupied by the veteran or spouse.

Look Back and Penalty Periods

For the first time, the VA will assess a penalty period for transfers of assets made within 3 years of applying for benefits, if fair market value was not received for the asset transferred. Benefits will not be paid during the penalty period. However, transfers occurring before October 18, 2018 will not create a penalty period.

Under the new rules, purchase of a "Medicaid compliant" annuity or funding an irrevocable trust is deemed a transfer for VA purposes and would cause a penalty period.

What does this mean for you?

HALE BALL attorneys Jean Galloway Balland Loretta Morris Williams are available for long term care planning to help clients understand how the conflicting rules of public benefit programs apply to their unique situation and to plan accordingly. Contact us today for details.

[i] This summary focuses only on veterans and widow/widowers. There are provisions for other dependents.